With federated peg there is a real side-chain, including mining, consensus rules etc and then the federated peg servers act as a protocol adaptor - the peg servers are full nodes on the side-chain, and pegged coins are paid to their multisig address (eg 10 of 15) and the side-chain fullnodes and miners watch the multisig address on the bitcoin network, and coins arriving there count as a peg to put coins into the side-chain; and when the side-chain hashrate majority approves a return peg to reanimate a coin, the federated pegs are watching the side-chain as they are full nodes there too, so they release the funds to the address the return peg tells them to.

Ok, this is new info to all of here who assumed federated server implementations of SC's were just that, server based only, without blockchains. This sounds more like a Ripple type system with gateways and a blockchain.

Yeah you know now you point it out, that is not super clear in the appendix A (that the thing being protocol adapted is a full side-chain), it justs says

"The key observation is that any enhancement to Bitcoin Script can be implemented externally byhaving a trusted federation of mutually distrusting functionaries13 evaluate the script and accept bysigning for an ordinary multisignature script. That is, the functionaries act as a protocol adaptor byevaluating the same rules we would have wanted Bitcoin to evaluate, but cannot for lack of scriptenhancements. Using this we can achieve a federated peg."

I did say earlier protocol adaptor but I see in hindsight "insufficient information"!

There are many brilliant people working on crypto technologies, but they are so in love with the technology and with their own ideas, they neglect to consider how their academic, theoretical work may apply to the world of finance. After all, bitcoin directly relates to finance.

I agree, and have had that discussion with a number of people on this, with me doing the pointing out. We have some advisors/investors who know a thing or two about finance & economics. We plan hire an economist and/or finance wizard (who can be trusted!) in due course.

Quote from: MarketNeutral

At this point, I think it's very important for people working on Bitcoin, sidechains, and all blockchain-related technologies, whatever they may be, to clearly state in lay terms WHY their work is important and necessary, which is to say, what problems their proposed solutions solve. Satoshi was very good at this.

The thread is kind of long, but it was explained at some point that the problem is it is hard to change code with $ billions of irrescindable ecash sitting on it so core changes have focussed on maintenance, cleanup refactoring, security as well as the odd new feature. There are many features people would like to have, even including basic needed features, that can not realistically be included into bitcoin-main, or not any time soon, some examples being zerocash, snark-contracts, high volume micropayments, native issued assets at least without some environment to gain an understanding of their behavior. Similarly its difficult to do hard-forks (major upgrade) because there is no live-beta mechanism. The sidechain was proposed to solve this set of problems.

actually i think you are incredibly confused since you're trying to secure all these supposed federated server SC's you claim are running with minimal MM'ing. you should let me know where these are located so i can go perform a 51% and destroy them

You do not understand tech. :-) - 1 timestamp is equal to 100% MM - SC can use POS or login to central server ... I really do not need to share my blockchain with 7B unknown people. (I work together with only few people, and do shopping in less than 100 local shops )

i think you do not understand SC's OR Bitcoin. :-)

there is no reason for a private coalition of central servers to adopt a blockchain to secure its data. it's a waste and insecure. let's say you have 10 centralized server businesses (federated servers) in your local area securing your blockchain and with whom you do business. one of them, unbeknownst to you, is the head of Discus Fish. once your local blockchain acquires enough scBTC, one day you'll wake up and they will be all gone.

actually i think you are incredibly confused since you're trying to secure all these supposed federated server SC's you claim are running with minimal MM'ing. you should let me know where these are located so i can go perform a 51% and destroy them

You do not understand tech. :-) - 1 timestamp is equal to 100% MM - SC can use POS or login to central server ... I really do not need to share my blockchain with 7B unknown people. (I work together with only few people, and do shopping in less than 100 local shops )

i think you do not understand SC's OR Bitcoin. :-)

there is no reason for a private coalition of central servers to adopt a blockchain to secure its data. it's a waste and insecure. let's say you have 10 centralized server businesses (federated servers) in your local area securing your blockchain and with whom you do business. one of them, unbeknownst to you, is the head of Discus Fish. once your local blockchain acquires enough scBTC, one day you'll wake up and they will be all gone.

actually i think you are incredibly confused since you're trying to secure all these supposed federated server SC's you claim are running with minimal MM'ing. you should let me know where these are located so i can go perform a 51% and destroy them

You do not understand tech. :-) - 1 timestamp is equal to 100% MM - SC can use POS or login to central server ... I really do not need to share my blockchain with 7B unknown people. (I work together with only few people, and do shopping in less than 100 local shops )

i think you do not understand SC's OR Bitcoin. :-)

there is no reason for a private coalition of central servers to adopt a blockchain to secure its data. it's a waste and insecure. let's say you have 10 centralized server businesses (federated servers) in your local area securing your blockchain and with whom you do business. one of them, unbeknownst to you, is the head of Discus Fish. once your local blockchain acquires enough scBTC, one day you'll wake up and they will be all gone.

It is not possible because I'll hire you as my personal SC advisor.

Edit:And we will siphon all bitcoin from Discus Fish into my SC. :-)

no offense, but it is difficult talking to you about this with all the sarcasm.

There are many brilliant people working on crypto technologies, but they are so in love with the technology and with their own ideas, they neglect to consider how their academic, theoretical work may apply to the world of finance. After all, bitcoin directly relates to finance.

I agree, and have had that discussion with a number of people on this, with me doing the pointing out. We have some advisors/investors who know a thing or two about finance & economics. We plan hire an economist and/or finance wizard (who can be trusted!) in due course.

Quote from: MarketNeutral

At this point, I think it's very important for people working on Bitcoin, sidechains, and all blockchain-related technologies, whatever they may be, to clearly state in lay terms WHY their work is important and necessary, which is to say, what problems their proposed solutions solve. Satoshi was very good at this.

The thread is kind of long, but it was explained at some point that the problem is it is hard to change code with $ billions of irrescindable ecash sitting on it so core changes have focussed on maintenance, cleanup refactoring, security as well as the odd new feature. There are many features people would like to have, even including basic needed features, that can not realistically be included into bitcoin-main, or not any time soon, some examples being zerocash, snark-contracts, high volume micropayments, native issued assets at least without some environment to gain an understanding of their behavior. Similarly its difficult to do hard-forks (major upgrade) because there is no live-beta mechanism. The sidechain was proposed to solve this set of problems.

That if your home computer had to do 2.25TB/day down to be a full node you might not be able to do it, which is a centralising factor.

Adam

Lets put problems in perspective, when I'm faced with the problem of managing 2.2TB/day in Bitcoin tx's the value stored in my 10 BTC that I've held onto all this time will take my hobby to a whole new level.

Building that data storage system would be a labour of love many will do it just to make sure there 10 BTC are secure.

That if your home computer had to do 2.25TB/day down to be a full node you might not be able to do it, which is a centralising factor.

Adam

Lets put problems in perspective, when I'm faced with the problem of managing 2.2TB/day in Bitcoin tx's the value stored in my 10 BTC that I've held onto all this time will take my hobby to a whole new level.

Building that data storage system would be a labour of love many will do it just to make sure there 10 BTC are secure.

The problem is not so much the storage. Bandwidth is where you'll run into a bottleneck

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010

That if your home computer had to do 2.25TB/day down to be a full node you might not be able to do it, which is a centralising factor.

Adam

Lets put problems in perspective, when I'm faced with the problem of managing 2.2TB/day in Bitcoin tx's the value stored in my 10 BTC that I've held onto all this time will take my hobby to a whole new level.

Building that data storage system would be a labour of love many will do it just to make sure there 10 BTC are secure.

Exactly. And, the demand to support 100k TPS will not happen anytime soon, maybe two or three decades from now. I remember, about 1990, buying 30MB hard disk drives and thinking they held a lot of data. 2TB is common today, and by the 2030s high density optical data storage could be standard:

Quote

In this paper, we present a review of the recent advancements in nanophotonics-enabled optical storage techniques. Particularly, we offer our perspective of using them as optical storage arrays for next-generation exabyte data centers.

Two terabytes of data has a cost of transportation to it, there has to be some feedback into the coin at some point. It would not be worth propagating that data without a decent set worth like bitcoin has, alot of the side chain coins arent really worth much so how could they be mixed in at some cost like this

The problem is not so much the storage. Bandwidth is where you'll run into a bottleneck

With that, IBLT can slash bandwidth requirements by at least 2 orders of magnitude. Only full node bootstrapping and re-sync will remain bandwidth intensive.

It will cut full-node bandwidth requirements by no more than in half.

IBLTs make propagation of solved blocks orders of magnitude more efficient, but that's only because the nodes already have the TXs in mempool. The TXs still need to be processed by each node as they're broadcast across the network; IBLTs simply prevent the TXs from being transmitted a second time with each solved block.

The problem is not so much the storage. Bandwidth is where you'll run into a bottleneck

With that, IBLT can slash bandwidth requirements by at least 2 orders of magnitude. Only full node bootstrapping and re-sync will remain bandwidth intensive.

It will cut full-node bandwidth requirements by no more than in half.

IBLTs make propagation of solved blocks orders of magnitude more efficient, but that's only because the nodes already have the TXs in mempool. The TXs still need to be processed by each node as they're broadcast across the network; IBLTs simply prevent the TXs from being transmitted a second time with each solved block.

Yes, but "simply" is an understatement. Real-time tx cross the network uniformly, with enormous capacity already available, perhaps 1000 TPS. It is block propagation which is time critical where milliseconds count. When a block is solved the rest of the mining network is then hashing uselessly until the block is fully propagated. Incentives are perverse, against large blocks which are ultimately needed to fund the network via fees rather than rewards. Removing the bottleneck for block propagation is a huge win for scaling Bitcoin.

Perhaps the sidechains project could be renamed "ways in which the bitcoin network (BCN) can interact with other internet services, and how the bitcoin protocol (BCP) would have to be modified to allow them". These "other services" being the "sidechains".

Different people have different ideas of what sort of services would qualify for "sidechains", but let's not focus on that, focus instead on the interactions. In order to exclude those variable assumptions, I will use the term "bitcoin-dependent service" (BDS) instead of "sidechain".

I gather that there are at least three kinds of interactions that are being discussed:

1. Bitcoins may be somehow be "moved" from the BTC blockchain to the BDS, who would handle them in some way, and eventually "return" them to the BTC blockchain. ...

2. The BDS may exploit the power of the BCN to secure its data structures against tampering or rewind...

3. The BDS could use the full power of the BCN to implement its own PoW mechanisms by merged mining...

Does this make any sense?

As you put

1. Mnt Gox, can run off with one's Bitcoin or a Bank or service could function on fractional reserves untill there is a confidence call and a proverbial run on the bank.

2. Is not necessarily parasitic, if it claims to be a better money sure it's 100% parasitic, there are other ways to achieve the same security one eg. Open Transaction with federated oracles. But any innovative multisig decentralized authoring system could achieve this with no change to the BCP.

3. MM is a good idea, while it limits innovation to just PoW, it can tap into the sea of hashing that goes to waste.

The way BlockStream has proposed to manage what you call BDS is to have in principal the multisig authorizing of Bitcoin transactions in and out of different secured ledgers, this will alow miners to MM BDS's in exchange for a token that is guaranteed to be redeemable in BTC by the BCP.

The perversion is miners could MM a BDS earn additional Bitcoin, without being forced to mine on the BCP or use there hashing power to protect the BCN.

MM = GOOD, but MM for BTC* is an attack at the very incentives that protect the BCN.

*MM alts are subject to market force, so while you can exchange them for BTC, the BCN is unaffected by them, if they gain value it will be a utilitarian value unsupported by the BCN, and thus just grow the ecosystem, otherwise it will shrivel and die as a scam.

MM a BDS that gives a token that is redeemable for BTC regardless of market rates allows miners to earn BTC equivalent tokens without contributing there hashing power (securing the Bitcoin blockchain) on the BCN, or any work to the greater economy. I.e. it has similar characteristics to our financial system today. What changes is just trust the central bank now becomes just trust the protocol. Making a change to the BCP to alow this is evil at the core.

Your conclusion is correct but I'm not sure how deep your understanding is, miners can manipulate (by mining empty blocks in the BDS or the BCN, controlling the flow of BTC and herding markets and controlling money flow, even restricting money supply on demand.

The problem is not so much the storage. Bandwidth is where you'll run into a bottleneck

With that, IBLT can slash bandwidth requirements by at least 2 orders of magnitude. Only full node bootstrapping and re-sync will remain bandwidth intensive.

It will cut full-node bandwidth requirements by no more than in half.

IBLTs make propagation of solved blocks orders of magnitude more efficient, but that's only because the nodes already have the TXs in mempool. The TXs still need to be processed by each node as they're broadcast across the network; IBLTs simply prevent the TXs from being transmitted a second time with each solved block.

Yes, but "simply" is an understatement. Real-time tx cross the network uniformly, with enormous capacity already available, perhaps 1000 TPS. It is block propagation which is time critical where milliseconds count. When a block is solved the rest of the mining network is then hashing uselessly until the block is fully propagated. Incentives are perverse, against large blocks which are ultimately needed to fund the network via fees rather than rewards. Removing the bottleneck for block propagation is a huge win for scaling Bitcoin.

how does the IBLT scale with the size of the block UTXO set? linearly or by some other ratio?

edit: actually iirc, it scales with the size of the difference btwn UTXO set estimates across the network. iow, a UTXO set estimated to be 99% similar across the network will allow a miner to send a smaller IBLT when solving a block than a UTXO set estimated to be only 89% similar across the network. is that right?

The problem is not so much the storage. Bandwidth is where you'll run into a bottleneck

With that, IBLT can slash bandwidth requirements by at least 2 orders of magnitude. Only full node bootstrapping and re-sync will remain bandwidth intensive.

It will cut full-node bandwidth requirements by no more than in half.

IBLTs make propagation of solved blocks orders of magnitude more efficient, but that's only because the nodes already have the TXs in mempool. The TXs still need to be processed by each node as they're broadcast across the network; IBLTs simply prevent the TXs from being transmitted a second time with each solved block.

Yes, but "simply" is a massive understatement. Real-time tx cross the network uniformly, with enormous capacity already available, perhaps 1000 TPS. It is block propagation which is time critical where milliseconds count. When a block is solved the rest of the mining network is then hashing uselessly until the block is fully propagated. Incentives are perverse, against large blocks which are ultimately needed to fund the network via fees rather than rewards. Removing the bottleneck for block propagation is a huge win for scaling Bitcoin.

Agreed. I didn't mean to understate the importance of IBLTs; I just wanted to point out for readers that IBLTs only improve block propagation (still an important problem) … and that each TX still needs to be processed by each node (linear BW scaling with TX/sec).

The problem is not so much the storage. Bandwidth is where you'll run into a bottleneck

With that, IBLT can slash bandwidth requirements by at least 2 orders of magnitude. Only full node bootstrapping and re-sync will remain bandwidth intensive.

It will cut full-node bandwidth requirements by no more than in half.

IBLTs make propagation of solved blocks orders of magnitude more efficient, but that's only because the nodes already have the TXs in mempool. The TXs still need to be processed by each node as they're broadcast across the network; IBLTs simply prevent the TXs from being transmitted a second time with each solved block.

Good point, I'd be more open to distributing the network tragic in a manner similar to the way SideChain would manage it when we have to manage that type of bandwidth.

From my perspective as things stand today the proposed SC change to the Bitcoin protocol has more risk than benefit.

The way BlockStream has proposed to manage what you call BDS is to have in principal the multisig authorizing of Bitcoin transactions in and out of different secured ledgers, this will alow miners to MM BDS's in exchange for a token that is guaranteed to be redeemable in BTC by the BCP.

The perversion is miners could MM a BDS earn additional Bitcoin, without being forced to mine on the BCP or use there hashing power to protect the BCN.

MM = GOOD, but MM for BTC* is an attack at the very incentives that protect the BCN.

*MM alts are subject to market force, so while you can exchange them for BTC, the BCN is unaffected by them, if they gain value it will be a utilitarian value unsupported by the BCN, and thus just grow the ecosystem, otherwise it will shrivel and die as a scam.

MM a BDS that gives a token that is redeemable for BTC regardless of market rates allows miners to earn BTC equivalent tokens without contributing there hashing power (securing the Bitcoin blockchain) on the BCN, or any work to the greater economy. I.e. it has similar characteristics to our financial system today. What changes is just trust the central bank now becomes just trust the protocol. Making a change to the BCP to alow this is evil at the core.

Again, this doesn't seem quite right to me.

"BDS" that give a token (block subsidy) are alts. They are in nature inflationary and by no means can you redeem these units for equivalent amounts of BTC.

Remember, you can only return to the mainchain what has been locked out of it.

In a properly implemented, ideal sidechain there is no block subsidy.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010

The way BlockStream has proposed to manage what you call BDS is to have in principal the multisig authorizing of Bitcoin transactions in and out of different secured ledgers, this will alow miners to MM BDS's in exchange for a token that is guaranteed to be redeemable in BTC by the BCP.

The perversion is miners could MM a BDS earn additional Bitcoin, without being forced to mine on the BCP or use there hashing power to protect the BCN.

MM = GOOD, but MM for BTC* is an attack at the very incentives that protect the BCN.

*MM alts are subject to market force, so while you can exchange them for BTC, the BCN is unaffected by them, if they gain value it will be a utilitarian value unsupported by the BCN, and thus just grow the ecosystem, otherwise it will shrivel and die as a scam.

MM a BDS that gives a token that is redeemable for BTC regardless of market rates allows miners to earn BTC equivalent tokens without contributing there hashing power (securing the Bitcoin blockchain) on the BCN, or any work to the greater economy. I.e. it has similar characteristics to our financial system today. What changes is just trust the central bank now becomes just trust the protocol. Making a change to the BCP to alow this is evil at the core.

Again, this doesn't seem quite right to me.

"BDS" that give a token (block subsidy) are alts. They are in nature inflationary and by no means can you redeem these units for equivalent amounts of BTC.

Remember, you can only return to the mainchain what has been locked out.

Why would a miner MM a BDS? Transaction fees, nothing but a good old honest 1:1 exchange is needed the token being the BTC substitute on the BDS blockchain. (Sure there will be SC with inflationary block subsidies call them what you like, I'll call them SC's)

Just a thought but alts add more value to the crypto market than SC, the reason those that fail illustrate the markets preference for a simple better money. SC will not succumb to the same market evolution. Alts that aren't scams will provide new utility.

The way BlockStream has proposed to manage what you call BDS is to have in principal the multisig authorizing of Bitcoin transactions in and out of different secured ledgers, this will alow miners to MM BDS's in exchange for a token that is guaranteed to be redeemable in BTC by the BCP.

The perversion is miners could MM a BDS earn additional Bitcoin, without being forced to mine on the BCP or use there hashing power to protect the BCN.

MM = GOOD, but MM for BTC* is an attack at the very incentives that protect the BCN.

*MM alts are subject to market force, so while you can exchange them for BTC, the BCN is unaffected by them, if they gain value it will be a utilitarian value unsupported by the BCN, and thus just grow the ecosystem, otherwise it will shrivel and die as a scam.

MM a BDS that gives a token that is redeemable for BTC regardless of market rates allows miners to earn BTC equivalent tokens without contributing there hashing power (securing the Bitcoin blockchain) on the BCN, or any work to the greater economy. I.e. it has similar characteristics to our financial system today. What changes is just trust the central bank now becomes just trust the protocol. Making a change to the BCP to alow this is evil at the core.

Again, this doesn't seem quite right to me.

"BDS" that give a token (block subsidy) are alts. They are in nature inflationary and by no means can you redeem these units for equivalent amounts of BTC.

Remember, you can only return to the mainchain what has been locked out.

Why would a miner MM a BDS? Transaction fees, nothing but a good old honest 1:1 exchange is needed the token being the BTC substitute of the BDS blockchain. (Sure there will be SC with inflationary block subsidies call them what you like, I'll call them SC's)

Just a thought but alts add more value to the crypto market than SC, the reason those that fail illustrate the markets preference for a simple better money. SC will not succumb to the same market evolution. Alts that aren't scams will provide new utility.

I fail to see the point you are trying to make.

Your argument seems to be that sidechains change miners incentive who can now earn subsidy for their work without having to secure the Bitcoin network.

Can you explain how this is any different that a miner who at this very moment can decide to MM Bitcoin and Namecoin?

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010